Thruway Authority seeks toll hike as the historic waterway continues to drain money from its coffers

Oct. 14, 2012
|

State canal inspectors pass through Lock 32 on Clover Street in Pittsford in late August. Communities such as Pittsford and nearby Fairport have capitalized on the tourism and recreational use of the historic waterway and its towpath. / Tina Yee/ staff photographer

Written by

Meaghan M. McDermott

Canal Structure Operator Jennifer Rosenbeck of Medina cleans the cap stands before the inspection. The NYS Canal Corporation inspectors went through a portion of Erie Canal to do inspections. They stopped at Lock 32 on Clover Street in Pittsford on Aug. 30. / TINA YEE /staff photographer

Findings

The Thruway Authority’s critics have consistently brought up the cost of the state’s canal system as a drain on its resources. Here’s what Gannett’s Albany Bureau found when it examined the situation: • The Thruway Authority spends an average of $80 million to $90 million a year on the largely recreational canal system. The canal is largely paid for through highway toll revenue. • The 524-mile canal system brings in about $2 million in annual revenue, for an annual deficit of up to $88 million. • The toll increase would bring in an estimated $85 million a year in new revenue. • The state is constitutionally obligated to keep the canal in good repair.

Boats leave Lock 32 on Clover Street in Pittsford on August 30, 2012 to head west on the Erie Canal. Today was also the day the lock was being inspected by the NYS Canal Corporation. / staff photographer

More

Related Links

As the state Thruway Authority ponders a steep toll hike on commercial trucks traveling by land, lawmakers and business lobbyists say it’s time for motorists to stop footing the bill for conveyances traveling by water.

New York’s historic canal system — including the Erie Canal, which runs through Rochester and many of its neighboring communities — is nothing like the critical commercial corridor it once was. Its annual revenue is dwarfed by the millions required to maintain it.

While the Thruway is struggling to pay its bills — this would be the fifth toll increase in seven years — critics say the canal system should find a new piggy bank rather than rely on revenue from the roadway that, in many ways, rendered it a relic.

But for the many towns and businesses buoyed by the canal’s vibrant tourism and recreational economy, that’s a grim prospect. Left to fight for funding in the morass of the state budget process, they say, it could be hard to keep the canal system afloat.

“The Thruway Authority has done a much better job of maintaining the canal than the Department of Transportation did previously,” said Perinton Supervisor Jim Smith. “DOT has severely limited funding, and is always struggling to fund its own projects, which are often faced with delays because the needed money just isn’t there. I don’t see giving the canal back to DOT as a reasonable solution.”

At stake could be the future of a canal system most motorists don’t know they’re funding when they cruise through a Thruway E-ZPass lane.

“I think the average person that uses the Thruway, they have no idea that some of that money helps the canals,” state Comptroller Thomas DiNapoli said in an interview with Gannett’s Albany Bureau. In an August report, his office called the canal system “a drain of resources” that has contributed to the deterioration of the Thruway Authority’s finances over the past decade.

According to a consultant’s report, the Thruway Authority spends an average of $80 million to $90 million each year on operating and construction costs for the 524-mile canal system. A proposed 45 percent toll increase on large trucks is estimated to bring in the same amount — about $85 million annually.

That far outpaces the $2 million in annual revenue brought in by the state’s four canals, which connect the Hudson River to Lake Erie, Lake Ontario, and the Finger Lakes.

Proponents of the waterways, however, say its more important to look at the economic boost provided by the canals, particularly in towns and villages in western and central New York. A 2007 study by public relations firm Eric Mower & Associates and touted by the Thruway Authority found the canals have a $380 million annual impact on upstate New York.

“It’s far-fetched to think the canal would pay for itself,” said Rob Mangold of Macedon, Wayne County, vice president of the Canal Society of New York State, a nonprofit educational organization of canal enthusiasts. “It’s not just for pleasure; it’s for irrigation, flood control, recreation, camping, hiking, canoeing, bicycling, rollerblading and walking. It’s about way more than something you can measure: quality of life.”

Assemblyman David Gantt, D-Rochester, chairman of the Assembly Transportation Committee, said moving oversight of the Canal Corp. to a different agency won’t solve the underlying problem for the Canal Corp., Thruway Authority or the state.

“We have problems in New York,” he said. “We have to get more revenues, and hopefully that will happen as the economy starts to pick up so we can do what we need to do. Moving the Canal Corp. just shifts the problem to someone else.”

But others would nonetheless like to see the Canal Corp. cut loose.

“Do I think that the canal corporation is very valuable and important to this state? Yes,” said Assemblyman George Amedore, a Montgomery County Republican and critic of the current funding arrangement. “But I think that to continue to allow the cars and the commercial traffic to pay for recreational boats to go up and down the canal I think is absolutely ludicrous and has to stop.”

A reasonable fit

About $1.1 billion has been spent on the Erie, Champlain, Seneca-Cayuga and Oswego canals since 1992, when Gov. Mario Cuomo and the state Legislature took the canal system off of the state’s books and shifted it to the Thruway’s.

During that time, a host of new canal amenities have opened along the waterway, many of them funded in part by the Canal Corp. There are a plethora of welcome centers, docking facilities and boat launches, and the Canalway Trail has added more than 150 miles of multi-use trails along the former towpath and adjacent abandoned rail corridors.

Still, the Comptroller’s Office noted in its report, “despite major investments and new amenities, boating activity on the Canal System is down by nearly one-third since the Thruway Authority assumed control.” In 2010, 99,343 vessels crossed a lock or liftbridge, down from 123,358 in 2007. Others use a recreational pathway along the canal, which caters to bicyclists and those traveling by foot.

The costs aren’t limited to just the waterway itself. The system also includes 57 locks, 20 lift bridges, 22 reservoirs, 114 dams and 1,500 other pieces of infrastructure that have to be maintained, along with thousands of acres of property, according to the Thruway Authority.

As of early this month, the Canal Corp. had 458 full-time employees, as well as 78 seasonal workers hired during the summer and for winter maintenance, according to the authority.

DiNapoli noted estimates are that the canal system will need $436 million more in operating and repair funding just through 2016.

The state is constitutionally obligated to keep the canals in good repair, and the 1992 law puts the responsibility squarely with the Thruway Authority. The financial arrangement has come into the spotlight each time the Thruway has moved to increase tolls.

The authority declined to make anyone with the Canal Corp. available for comment. A Thruway Authority spokesman said the proposed highway toll increase was not being used to offset its canal obligations.

At an August hearing, John Bryan, the Thruway Authority’s chief financial officer, said putting the canals under the authority’s umbrella wasn’t a financial gimmick but was viewed as an economic opportunity.

“It wasn’t just for the fiscal convenience of the state,” Bryan said. “I believe there was a desire to see the canal — which was getting very old with infrastructure that wasn’t very good — to have some new investment, recognizing the economic impact it has on the state of New York.”

While towns in western and central New York have used the canal as an economic and tourism driver, the cost to the state has been consistent. It was worsened by tropical storms Lee and Irene, which caused about $114 million in damage, though the state expects to recoup about $85 million from the federal government.

The authority and canals are well-matched, Mangold said, because their main systems run almost in parallel from one end of the state to the other, and the financial arrangement keeps the state’s regular taxpayers from taking on the full cost of the system.

Smith said the canal’s benefits are apparent in Perinton, where officials recently opened a public dock in Bushnell’s Basin that features a pump-out station, public restroom and shower facilities. He said the dock area is abuzz all summer long with boaters and residents enjoying the view and patronizing local businesses.

“It’s a real asset to all our communities,” he said. “And, the more you put into it, the more you get back.”

Canal legacy

Begun in 1817 by Gov. DeWitt Clinton, it took eight years to build the 363-mile Erie Canal, which stretches from Albany to Buffalo and bisects Monroe County. The canal system was key in establishing New York City as the nation’s largest port, provided a trade route that drove the nation’s westward expansion and, according to the Canal Corp., left an indelible footprint on the overall development of the state.

The canal was key in establishing Rochester as a major city in the mid-19th century. With new trade routes opened, the city — one of the nation’s first “boom towns” — rose to prominence as “the Flour City” on the strength of its many mills, then as “the Flower City” on the strength of its booming nursery business, then transformed into a major manufacturing hub.

Indeed, with the exception of Elmira and Binghamton, every major city in New York falls along the canal’s route. And, 80 percent of residents of upstate and western New York live within 25 miles of the canal.

“The canal is a great asset to the state, and I don’t think there’s anyone who says we should close down the Erie Canal,” Gov. Andrew Cuomo told reporters in August. “It’s part of our history, it’s part of our legacy, it’s important for tourism. It is not a moneymaker at this point, but it’s an important part for the state.”

Although under discussion, moving the canals back onto the state’s books could prove difficult in current economic conditions. While several bills introduced in the Legislature would shift the responsibility to the state’s transportation or parks departments, state agencies were instructed by the Cuomo administration last month to hold spending flat as they construct budget proposals for the next fiscal year, which starts April 1.

One public study even looked at the possibility of shifting canal oversight to the U.S. Army Corps of Engineers, which oversees various levees and spillways, most noticeably on the Mississippi River.

“It’s about finding a home for it, and I don’t think it fits in any one place well,” Bryan said at the Assembly hearing in August.

One bill, sponsored by Buffalo-area state Sens. Mark Grisanti and Patrick Gallivan, would move the burden to the Department of Transportation. Gallivan acknowledged that the agency would have to cut its own spending to make room for the added cost.

“By moving it back to the Department of Transportation, we’re helping fix the Thruway’s short-term problem while calling on them to look internally and fix their long-term problems and manage this properly,” said Gallivan, an Elma Republican. “The (Thruway’s) fiscal management just doesn’t seem quite right to me.”

State Sen. Joseph Robach, R-Greece, called the proposed toll hike a “ridiculous” move that would “fly in the face” of the new more business- and taxpayer-friendly atmosphere the Legislature and Cuomo have worked to attain. He suggested that the Thruway Authority and Canal Corp. more closely integrate their operations.

“I agree with Comptroller Thomas DiNapoli that the Thruway Authority should audit internally and potentially merge, in addition to seek other ways to save money,” he said.

Thomas Madison, the executive director of the state Thruway Authority, told an Assembly committee in August that the authority is looking at cutting costs internally, but is obligated to make sure the canal is in working order. A pair of recent reports — one by an outside consultant, the other by the state Comptroller’s Office — have criticized the authority’s management of the canals.

“We’re looking at ways to become more integrated between the Canal Corporation and the Thruway Authority, whereas historically they’ve been operated more like independent functions,” Madison said. “As long as we have that obligation and responsibility, we will continue to take it seriously and we will maintain the system as required.”

DiNapoli’s report called for the Thruway Authority to request an independent analysis of the canal system to look for ways to streamline operations, look for new sources of funding and “develop a realistically attainable vision for its future role in the upstate economy.”

For Unshackle Upstate, a Rochester-based group that has been highly critical of the canal system’s finances and the proposed toll increase, the canal should be sent to a more appropriate financial home.

“Our position has been and will continue to be that the canal, while a significant part of our history, is a 19th century transportation system that probably belongs more appropriately placed in the Parks Department than it does the Thruway Authority,” said Brian Sampson, the group’s executive director.